Goldman Sachs Refuses to Confirm that "Goldman Puts Its Clients' Interests First
“Who wants to entrust their money to a Goldman Sachs fund after this?” asks Brett Arends in his ROI column in the Wall Street Journal. Arends is referring to the sorry spectacle of a Senate hearing at which four Goldman executives were asked questions about the firm's role in the collapse of the mortgage market. They seemed unable or unwilling to explain why Goldman sold investments that internal Goldman emails described as “shitty.”
But what really made those execs squirm was a simple question from Maine's Susan Collins (R.), which, Arends says, “should be a slam dunk for any self-respecting professional–namely, whether the firm puts its clients' interests first. And several pointedly refused to give a direct answer.” To Arends, it sounded “like rhetoric from the public relations firm of Waffle, Weasel and Spin.”
Not all Goldman clients are institutions (“sharks trying to outsmart other sharks,” as one commentator put it). According to Arends, ordinary American individual investors have more than $50 billion invested in Goldman Sachs mutual funds, citing industry specialist Financial Research Corp. “That makes the beleaguered Wall Street bank one of the top 25 managers in the country,” says Arends.
Goldman Sachs’ squirming admission to the United States Senate that it does not put its clients’ interests first in that “shark tank” world it operates just goes to show how desperately we need more consumer protection. Senator Schumer has proposed an amendment to the financial reform bill that would establish an independent non-governmental non-profit Financial Consumers’ Association (FCA) that would be funded by consumers, not the government. Why in the world would anyone oppose it? As the amendment points out:
“…the financial industry has enjoyed virtually unlimited access to represent its interest before Congress, the courts, and State and Federal regulators, while financial services consumers have had limited representation before Congress and financial regulatory entities;” and
“…the Federal Government has a substantial interest in the creation of a public purpose, democratically controlled, self-funded, nationwide membership association of financial services consumers to enhance their representation and to effectively combat unsound financial practices.”
As consumer advocate Ralph Nader points out: “The Federal Government has long paid for facilities in the U.S. Department of Agriculture for agricultural businesses to band together and assess themselves to promote beef, corn, cotton and other commodities to increase their profits. By contrast the FCA, once launched, would be composed of consumers paying their own way to preserve their hard-earned savings from predatory financial speculators.”
Senators, Congressmen, do the right thing. And don’t bother to ask Goldman Sachs about it. Just do it.
Page Perry, LLC is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in representing institutional and corporate investors that lost money investing with Goldman Sachs in CDOs and other structured finance instruments. For further information, please contact us.
